Doing Your Due Diligence: 7 Tips for Finding the Best Loan Provider out There

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There are plenty of seemingly attractive loan deals available when you are in the market to borrow some cash but it pays to shop around and work out which is the best offer for you before you commit to one and sign on the dotted line.

Here are some pointers on what to look for and what questions you need answering before you can be certain that you have found exactly the right loan deal for your circumstances, and that doesn’t mean just finding the cheapest rate.

Negotiate From a Position of Strength

You can’t begin to know what sort of loan deal is suitable or even which ones you will be eligible to apply for until you have a clear idea of what your credit score and payment history looks like to potential lenders.

If you are seeking to consolidate your borrowing, there is more found here about that, or want a mortgage deal or a car loan, the same rules of engagement apply.

You should check your credit rating as a starting point before you make any applications for finance so that you check what information is on your file and what sort of rating you currently have.

If your score is not as good as it could be this will often preclude you from getting some loans or qualifying for the lowest interest rate offers, however, if you have a great score that should allow you to find the best deals around knowing that there is a fair chance you will be accepted when you apply.

Checking your credit score is easy to do and if you waste attempts to get a loan before checking your status, failed applications or searches registered by lenders could worsen your options for finding a deal that you will get accepted for.

Check What the Interest Rate Actually Is

Many lenders will advertise what is classed as a headline rate, in other words, an attractive rate that is designed to entice you and make an application for credit.

What you can find is that these lenders might be quoting a representative rate which is available to some but not all of their borrowers.

Don’t assume that you are being offered the same rate of interest as the percentage will often be adjusted based on how much you are asking to borrow and how good your credit rating is.

If you are perceived as a riskier lending proposition it is likely that you will be offered a deal at a higher rate of interest than the one advertised, so check exactly what is being offered to you.

Loyalty is Not Always Rewarded

You could be forgiven for thinking that if you have been with your bank for a number of years they might want to look after you and offer you a loan at a competitive rate of interest.

It might be that a bank or lender that you already have a relationship with doe offer you a great deal, but it might also prove to be a deal that could be bettered elsewhere.

It always pays to shop around and see what other loan deals are out there as loyalty doesn’t necessarily pay when it comes to banks and their customers.

Work Out How Much You Will Be Paying Back

Many of us just want to know what the monthly payments are so that we can decide whether the amount is within their budget.

As part of the loan evaluation process, you should take a look at the term of the loan and how much you are going to pay back in total.

Working out how much it will cost to pay back a loan over three years and how much more it will cost to spread the payments over five years, for example, could make you decide that you want to try and pay back earlier to reduce the total cost of the loan.

Lock The Rate Down

You should be offered a loan deal that charges the same fixed rate of interest for the duration of the loan, but it is wise to check that is the case before signing anything.

You don’t want a nasty surprise down the line when the interest rate is raised halfway through the loan. Check the small print and confirm that the interest rate is fixed for the length of the loan.

Can You Pay The Loan Back Early?

A number of borrowers take out a loan and then decide that they want to pay it back early, only to discover that there are extra charges to pay for settling the finance deal before time.

Your circumstances might change and it might suit you to settle the loan earlier than planned which is why it is advisable to check whether there is the option for early settlement and whether any charges or penalties apply if you take that option.

If you think you might clear the loan early look for a loan deal that doesn’t apply any early repayment charges.

Borrowing More Might Even Save You Money

As strange as it might seem, there is the possibility that if you borrow slightly more than you originally intended to it could potentially open up the possibility of a cheaper deal and allow you to make some savings on your borrowing costs.

You should always exercise caution when it comes to how much borrowing you are exposed to but many lenders tend to offer lower interest rates for larger loans.

It might be the case that borrowing a slightly larger amount unlocks the door to a lower rate deal, which could mean that your total cost of borrowing turns out to be less than if you borrowed what you originally thought you might need.

Do the sums and see if this is a scenario that could apply to your loan deal.

Borrowing any amount of money is not something you do lightly but if you exercise due diligence and shop around for the best deal you will at least know that you have done your best to get what you need on the most attractive terms available.

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